(Bloomberg) -- Denmark’s central bank raised its economic growth forecast for the Nordic country through 2025, saying the pharmaceutical industry is driving most of the expansion, while other parts of the economy face a downturn.

Gross domestic product will probably expand 1.7% in 2023, up from a March estimate of 0.9%, the central bank said on Wednesday. The Danish economy is then set to grow by 1.3% in both 2024 and 2025, versus the previous forecast of 1.2%.

“The surprisingly strong growth in the Danish economy over the past year seems to be driven by production in a very small segment of the economy,” the bank said. “So far, pharmaceutical production has been keeping overall Danish exports and GDP afloat, while the rest of the manufacturing industry is in downturn.” It added that the “underlying outlook is for relatively subdued growth in Danish exports of goods.”

Denmark, along with neighboring Norway, has coped better with the fallout from higher prices and surging borrowing costs than most regional peers, with inflation slowing in past months and house prices rebounding. Last month, the Danish government also lifted its GDP forecast, saying it expects 1.2% growth this year.

Much of the growth so far has been helped by success of Novo Nordisk and its pharmaceutical peers. Latest GDP figures out of Denmark show that the economy expanded 1.7% in the first half of 2023 compared with the year-earlier period, but would have contracted by 0.3% in that time without the pharmaceutical industry’s contribution.

The central bank projects that house prices will drop by 3.2% in 2023, less than the 9.4% decline anticipated in March. Meanwhile, the inflation rate is expected to land at 3.8% this year, lower than 4% seen before.

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